EU regulators to deny UPS-TNT merger, reports say

Friday, October 12, 2012

The proposed UPS takeover of TNT Express could be on the rocks, according to reports this week from Reuters and the Financial Times.
Delays in obtaining regulatory approval of the 5.2 billion euro ($6.5 billion) deal last spring between two of the world's Big 4 integrated express carriers were the first sign of potential problems.
Two weeks ago, Joaquín Almunia, European Commission vice president responsible for competition policy, expressed concern about the concentration of market power in a small number of big companies and whether FedEx and DHL would provide sufficient competition for rates and services. Making sure no monopoly effects arise from the deal is important because so many European businesses and consumers depend on cross-border document and parcel deliveries, he said.
The European Commission will notify UPS next week that the pending merger is anti-competitive, according to Reuters. The wire service attributed its report to two unnamed sources "close to the matter."
The Financial Times, also relying on anonymous sources,said EU anti-trust regulators will object to the sale of Netherlands-based TNT Express unless UPS offers to divest certain holdings to eliminate anti-trust concerns.
The Wall Street Journal reported last month that antitrust regulators are taking a much narrower approach to defining the market than UPS originally anticipated, examining competition on a country-by-country and even route-by-route basis rather than simply Europe at large. The analysis also is limited to the four big express carriers and does not take into consideration the services available from many smaller courier companies on the continent.
Adding TNT to its portfolio would give UPS the scale and network to be a dominant player in Europe on par with DHL.
TNT handles almost 1 million shipments per day, including freight. It had revenues of 7.2 billion euros last year. - Eric Kulisch